At Gems in the Rough, a jewelry company, the engraving department is a bottleneck. The...
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At Gems in the Rough, a jewelry company, the engraving department is a bottleneck. The company is considering hiring an extra worker, whose salary will be $55,000 per year, to ease the problem. Using the extra worker, the company will be able to engrave 8,200 more units per year. The selling price per unit is $16.00. The cost per unit currently is $11.80 as shown: Direct material $4.50 Direct labor 2.10 Variable overhead 1.45 Fixed overhead (primarily depreciation of equipment) 3.75 Total $11.80 What is the annual financial impact of hiring the extra worker for the bottleneck process? Profit increased
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